Will Hynix' new fab prolong NAND glut?

SAN JOSE, Calif. -- Amid large losses and a memory downturn, Hynix Semiconductor Inc. has announced the grand opening of its new, 300-mm NAND fab in Korea, with initial production slated for September.

With the announcement, Hynix has become perhaps the wild card in NAND. Perhaps the company is simply reckless: It is opening the fab amid a NAND glut and vast financial losses.

Samsung, Toshiba and the Intel-Micron duo are also ramping up relatively new NAND fabs, but those vendors are showing some restraint in the current climate. The question is whether Hynix' fab ramp will exacerbate or prolong the current and horrific NAND flash-memory downturn.

The NAND flash market has seen a sharp downturn since the beginning of 2008. And iSuppli Corp. has recently cut its 2008 NAND annual flash revenue growth forecast from 9 percent to virtually zero.

With the exception of market leader Samsung Electronics Co. Ltd., the other NAND suppliers are losing money. Intel, Micron, Hynix and Toshiba are all losing money in NAND, due to a capacity glut and product procurement cutbacks from one of the biggest NAND buyers: Apple Computer Inc.

It's unclear how fast Hynix will ramp its new fab. But clearly, if the company does not exhibit any restraint, it could potentially prolong the NAND downturn. Some believe Hynix will show little or no restraint.

Many do not see a recovery until the second half of 2009. NAND leader Samsung tends to be the mover and shaker in the market, but Hynix could hold the supply and demand key.

There are other factors as well. ''Flash needs very strong consumer electronics demand between now and December to turn around gross margins and sales for manufacturers,'' said Jim Cantore, president of consulting firm JLC Associates. ''Slowing down the capacity expansion plans would also help a lot.''

In recent times, Hynix has reduced its NAND production in a 200-mm fab in Korea. Japan's Toshiba Corp. has recently closed a 200-mm NAND fab amid a massive 300-mm expansion plan.

But the fab shutdowns have not impacted supply. And now, Hynix, the world's third largest NAND supplier, is now ramping up a new 300-mm fab. Located in Cheongju, Korea, Hynix broke ground on the so-called M11 fab in April of 2007. The fab, which occupies a grand total of 294,637 square meters, is the third plant at that site.